Havells to sell Sylvania, another unit to Chinese firm for $205M

By TEAM VCC

  • 10 Dec 2015

Electrical products maker Havells India Ltd said on Thursday it has agreed to sell its Sylvania lighting business and another unit to China’s Shanghai Feilo Acoustics Co Ltd for 186 million euros (about Rs 1,340 crore, or $205 million).

Havells India, through unit Havells Holdings Ltd, will initially sell an 80 per cent stake in Havells Sylvania Malta BV and plans to divest the remaining after three to five years.

Havells India has also agreed to sell lightning products trading unit Havells Exim Ltd, Hong Kong, to the Chinese lighting products maker. It will first sell 80 per cent of this unit and the remaining within nine months of the close of the initial stake sale.

The Indian company said it expects to close the 80 per cent stake sale in both units by February. The value of the 80 per cent stake in the two units is 148.8 million euros and the value of 100 per cent stake is 186 million euros, it said, adding that its cumulative investment value in the units is Rs 980 crore.

The sale to Feilo does not include Sylvania units in the US, Brazil, Chile and Thailand, the Indian company said.

Feilo is a listed company with key shareholding held by Inesa Ltd, a state-owned enterprise of Shanghai government.

Havells had acquired German company SLI Sylvania’s lighting business in 2007 for $300 million to build a global presence. But the global slowdown that followed dragged Sylvania into losses, and the company became a drag on Havells. The Indian company then restructured Sylvania by shutting down plants, reducing fixed costs and trimming workforce. Sylvania started reporting profits from 2010-11. 

Shares of Havells jumped on the stake sale announcement. The shares closed 8 per cent higher at Rs 305.35 on the Bombay Stock Exchange where the benchmark Sensex gained 0.86 per cent.

Sylvania has operations in about 48 countries. It posted standalone net revenue of 443.1 million euros in 2014-15, compared with 440.1 million euro the year before. Earnings before interest, depreciation, tax and amortization were 6.3 million euros in 2014-15, down from 16.5 million euros the year before.

Havells Holdings, based at Isle of Man, holds investments and mobilizes funds for 53 Sylvania subsidiaries of the Indian company. Havells Exim procures electrical products for Havells' and Sylvania's trading operations.